Institutional investors block G City CEO's golden parachute

A month after causing a stir in the local market, the income-producing real estate company G City, controlled by businessman Chaim Katzman, has decided to withdraw the granting of a "golden parachute" to incoming CEO Keren Khalifa, in light of opposition from institutional investors.

The company chose to remove the approval of Khalifa's terms of office from the agenda to "exhaust dialogue with institutional bodies." This follows the board of directors' decision last month to accelerate Khalifa's start date and approve new employment terms—a move perceived as a factor in the collapse of the massive deal to sell control of G City to businessman Tzahi Abu.

The proposal, which required shareholder approval, would have seen Khalifa take office in early October, replacing Katzman, who had announced his intention to retire from the company he founded as part of the control sale process.

The compensation package formulated by the board included an annual cost of approximately 4.4 million shekels, consisting of a 2.3 million shekel base salary, an annual bonus of up to 1.3 million shekels, and equity compensation worth 855,000 shekels. Additionally, in the event of termination within one year of a change in control, Khalifa would be entitled to an exceptional golden parachute—a bonus equal to 200% of her base annual salary (4.6 million shekels total).

The move that led to the collapse of the deal?

The decision to withdraw the proposal, at least temporarily, comes less than a month after the collapse of the deal to sell a 26% controlling stake in G City from Chaim Katzman's Norstar to Tzahi Abu's Ari Real Estate and Ispro, owned by Kidan Dahari and Yaron Adib, for 661 million shekels.

Following the collapse, some claimed the excessive terms for Khalifa undermined the relationship between the parties. "He told me during negotiations that he wanted to keep Keren as CEO," Abu said earlier this month. "I said I didn't object, but I absolutely did not agree to the terms he gave her—not the golden parachute and not the salary. But I didn't complain or say, 'You did something unacceptable and I want to cancel the deal'."

Conversely, Katzman claimed in an investor call that the move "was done with the knowledge, consent, and blessing of the other side. I had explicit consent for Keren's appointment on the set date, for a period in which I was supposed to be appointed co-chairman alongside Tzahi Abu. By definition, if I move to chairman, a CEO is needed, hence the advancement of the appointment."

G City responded: "A number of clarification questions were received, and we will address them with the necessary attention. We estimate that it will be possible to convene a meeting to approve the relevant clauses soon. The board's decisions on the subject remain in effect."